Know Why Mortgage Rates Go Up So You Can Decide When to Buy

Learning why mortgage rates go up and down will help you determine when the most opportune time for you to buy will be


why mortgage rates go up

Do you know why mortgage rates go up? The interest rate you pay on your mortgage has a significant impact on how much you end up paying for your mortgage over time. Even if you don’t have the information you need to determine how much a few percentage points will increase your overall payments, you still want to find the lowest possible rate.

So, how are you supposed to know whether mortgage rates will go up or down if you hold off on getting a mortgage? We can’t always know for sure since unexpected situations can arise at any time to change market conditions. Still, there are some indicators we can look at to get an idea.

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Understanding why mortgage rates go up

Mortgage rates respond to market conditions. Unemployment rates and inflation are two of the biggest indicators of what future mortgage rates will do. The direction of the market is a significant reason for why mortgage rates go up. Looking at these two things together will give you the best indication of how much money will be in the economy and how mortgage rates will respond to that.

For example, data shows that mortgage rates tend to rise when there are higher inflation rates and lower unemployment rates. These conditions mean that there is more money circulating in the economy. The housing market would expect to see a similar increase in housing purchases, and mortgage rates could rise in response.

Lowering mortgage rates may entice people to buy while they can lock in a lower interest rate for their mortgage life.

It’s also important to know why mortgage rates go down

If those factors are critical in why mortgage rates go up you can look at the opposite conditions to project lower mortgage rates. When unemployment rates are high and inflation is low, mortgage rates are likely to drop. These are signs of the economy slowing down, and lowering mortgage rates is a response to encourage people to put money into the economy.

Most people are more willing to buy if they know they won’t pay as much interest over the life of their loan. Be careful not to fall too easily for low interest rates, though. There are still a lot of fees that come up-front with buying a home. Don’t force yourself to find a way to buy just because mortgage rates have gone down.

While the information the market provides can be useful, remember there is no better information than what your finances can give you. Do you have enough money to make a substantial down payment without destroying your emergency fund? How long would you be able to make payments on this home if you were to lose your job?

Do you feel like you have a better understanding as to what makes mortgage rates move up and down? How soon are you looking to purchase a home? How much money do you have for a down payment?

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Securing the best mortgage interest rates can save you a lot of money. Find out the best ways to get low interest rates … and other money-saving tips—revealed in this FREE report, Mortgage Interest Rates: How to Find the Best Interest Rates and Other Tips for Securing Low Mortgage Payments.

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